E. Automatic Bankruptcy through Failure of a Commercial Proposal

Author:Roderick J. Wood
Profession:Faculty of Law. University of Alberta
Pages:74-74
 
FREE EXCERPT

Page 74

FAILURE OF A COMMERCIAL PROPOSAL

A bankruptcy can also come about automatically without the intervention of either the creditor or the debtor. This occurs when an attempt by the debtor to reach a commercial proposal with the creditors fails. This can happen if the cash flow statements and associated documents or the proposal are not filed within the time periods set out in the statute,170 if the creditors vote down the proposal171or are deemed to have done so,172if a court decides not to approve the proposal,173or if a court later annuls it.174Once one of these events occurs, the debtor is deemed by the statute to have made an assignment at the time of the occurrence of that event. There is no similar provision in the Companies Creditors’ Arrangement Act providing for automatic bankruptcy in the event that a corporate restructuring fails under that statute.

[170] BIA, above note 1, s. 50.4(8).

[171] Ibid., s. 57.

[172] Ibid., ss. 50(12.1) and 57.

[173] Ibid., s. 61(2).

[174] Ibid., s. 63(4).

To continue reading

FREE SIGN UP